- USD/JPY falls sharply as US consumer inflation data shows core inflation slowing.
- The yen appreciates due to the Bank of Japan governor's hawkish remarks. US 10-year bond yields fell 12bps.
- Upcoming Fed speeches and US economic data will be key to the further direction of the market.
USD/JPY fell more than 1% in early trade in the North American session as core US inflation data returned to a downward trajectory. At the time of writing, the pair is trading at 156.33.
US dollar falls to 156.33 yen against yen on US inflation data showing slowing core prices
The U.S. Bureau of Labor Statistics (BLS) said consumer inflation rose 0.4% month over month, higher than the 0.3% expected if the number remained unchanged compared to November's reading. The annualized Consumer Price Index (CPI) rose by 2.9% as expected, up 2 ticks from 2.7% previously.
So-called core inflation, which excludes variable items, expanded by 0.2% from the previous month, as expected. At the same time, it is up 3.2% in the trailing 12 months, lower than the 3.3% forecast in November by economists.
The yen extended its gains as the dollar/yen pair fell from around 157.00 to the current spot price. As a result, the yield on the 10-year US Treasury note fell more than 12 basis points (bps) to 4.661%.
At the beginning of the Asian session, Bank of Japan Governor Kazuo Ueda made some hawkish remarks. He said he would adjust the rate hikes and the amount of financial support if the economy improves and price conditions continue. He emphasized that spring wage negotiations are extremely important, noting that a positive view on wages was expressed at the Bank of Japan's branch manager meeting.
Later in the day, Fed speakers Thomas Barkin, Neel Kashkari and John Williams will take to the news wire ahead of Thursday's release of retail sales and unemployment claims. Japan's economic data for the rest of this week is blank.
USD/JPY Price Analysis: Technical Outlook
Although the uptrend is maintained, USD/JPY may pull back in the short term. Once sellers pushed the price below Tenkangsen's 157.41, it opened the door to further losses. The next significant support comes at the 156.00 number, followed by the baseline at 154.94. If this clears, the next support will be at the 50-day simple moving average (SMA) at 154.74.
Today's Japanese yen price
The table below shows the percentage change of the Japanese Yen (JPY) against major listed currencies today. The Japanese yen was the strongest against the US dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.22% | -0.49% | -1.03% | -0.20% | -0.72% | -0.64% | -0.19% | |
| EUR | 0.22% | -0.27% | -0.82% | 0.00% | -0.50% | -0.42% | 0.03% | |
| GBP | 0.49% | 0.27% | -0.58% | 0.29% | -0.23% | -0.15% | 0.32% | |
| JPY | 1.03% | 0.82% | 0.58% | 0.84% | 0.32% | 0.40% | 0.87% | |
| CAD | 0.20% | -0.00% | -0.29% | -0.84% | -0.52% | -0.43% | 0.02% | |
| australian dollar | 0.72% | 0.50% | 0.23% | -0.32% | 0.52% | 0.09% | 0.54% | |
| new zealand dollar | 0.64% | 0.42% | 0.15% | -0.40% | 0.43% | -0.09% | 0.46% | |
| swiss franc | 0.19% | -0.03% | -0.32% | -0.87% | -0.02% | -0.54% | -0.46% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select Japanese Yen from the left column and move along the horizontal line to USD, the percentage change displayed in the box represents JPY (base)/USD (estimate).
Conversely, if USD/JPY rises above 157.00, it will open the way to challenge the 157.41 outlook line. If it gets stronger, the next resistance will be at the 158.00 mark.
